Santander is looking to shake up the balance transfer market by offering a 0% introductory APR for 18 billing cycles. In order to get this rate, you have to apply for the Sphere credit card and transfer debt from another bank to Santander (you cannot transfer debt from another Santander product). In addition, you will have to pay a 4% upfront fee for the transfer. Given the length of the balance transfer, the 4% fee can be a good deal, depending upon the interest rate that you are currently paying. For most people, you will already be saving money (including the fee) by month six.
Take note that this card is only available to people who live in: CT, DC, DE, ME, MD, MA, NH, NJ, NY, PA, RI, or VT.
They also offer rewards and a bonus off for your spending, which you should avoid, because interest will start accruing right away.
If you have high interest rate credit card debt, this could be an excellent option to pay off your debt faster. Just make sure you complete your balance transfer as quickly as possible. We also recommend that you set up an automatic payment, so that you always pay on time. If you are 60 days late, you can lose your 0% rate and be subject to punitive pricing.
Who is Santander?
Although small in the United States, Santander is an enormous bank globally. It is headquartered in Spain, and rapidly grew throughout Latin America and Europe. The bank has over $1.25 trillion of assets globally, and dominates the Spanish market. You don’t have to walk far in Madrid or Barcelona to see the bright red of Santander.
They are also a big sponsor of Formula 1, and the bank is run by a close-knit family.
Santander has a very aggressive reputation in banking circles. I used to work in Europe, and Santander was viewed as a very tough competitor. They would use very strong sales incentives, so customers would regularly be on the receiving end of a hard sales pitch. They would also take a much longer term view compared to American and English banks. Whereas most American banks want to make money within 1-2 years on a new customer, Santander would be willing to wait longer. That meant they would usually fund much more aggressive switching bonuses. At MagnifyMoney, we are not surprised to see 2 year 0% offers coming from Santander, as they look to take market share in the US.
Santander has purchased Sovereign Bank, a regional bank in the northeast. They have recently rebranded the business to the global red brand, and are looking to expand. Credit cards is a great way to grow quickly outside of their normal geographic footprint, so you can expect to see more offers coming from them.
So, Santander is a large bank that won’t be going anywhere soon. However, they are an aggressive bank with strong profit motives. So, you shouldn’t be afraid to take advantage of the sign-on bonus offers. But, you should be careful when the bonus offer ends.
The Balance Transfer Offer
The balance transfer offer is very straight-forward. You pay (at the beginning) a 4% fee. You then pay no interest for 18 billing cycles, so long as you pay on time. The interest you would have been charged is waived completely. You will never see a retroactive charge.
From month 19, your interest rate will revert to the standard interest rate, which is high.
In order to be approved, you need to have good credit. You have a decent chance at 680, and an excellent chance if your score is above 700. You will also need a debt burden that can handle the debt. You calculate debt burden by taking your total monthly expenditures (mortgage + auto payment + student loan payments + credit card monthly payments + any other credit bureau debt) and divide that by your monthly gross income. Your best chance of being approved is with a debt burden below 40%. You have to tell Santander your income when you apply.
As a general rule, you do not want to spend on a credit card with a balance transfer. There are two main reasons for this.
First, the goal of a balance transfer is to pay off your debt. So, if you start spending on the credit card, there is a big risk that you won’t pay off debt during the promotional period, and you will end up in worse shape at the end of the promotional period. Just put the card in the freezer and forget about it.
The second reason is the trick played on people by the banks. If you have a balance transfer on a credit card, than you no longer have a grace period on purchases. So, interest will be charged on any purchases, at the standard purchase interest rate, from the moment you make the purchase.
If you are looking for rewards, there are better products out there. After the sign-on bonus, this is basically a 1% rewards card. To find a better cash back credit card, you can use our cash back tool.
If you have credit card debt that you can’t pay off in the next 6 months, a balance transfer could be a great option. If you’re looking for rewards or to make a big purchase, there are other, better credit cards available.
- Intro BT APR
- 0% Intro APR on Balance Transfers for 15 months
- Balance Transfer Fee
- Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater.
- Regular Purchase APR
- 16.49% - 25.24% Variable
If your debt is not with Chase, and you can pay off the debt in 15 months or less, you should consider Chase Slate®. It has 0% Intro APR on Purchases for 15 months and 0% Intro APR on Balance Transfers for 15 months (16.49% - 25.24% Variable APR, afterwards), and an Intro $0 on transfers made within 60 days of account opening. After that: Either $5 or 5%, whichever is greater. This can be a better deal than Santander.
- Intro BT APR
- 0%* for 21 months on Balance Transfers*
- Balance Transfer Fee
- 5% of each balance transfer; $5 minimum.
- Regular Purchase APR
- 14.49% - 24.49%* (Variable)
Another option is the Citi® Diamond Preferred® Card– 21 Month Balance Transfer Offer which provides more time to pay off debt. This card offers an intro 0%* for 21 months on Balance Transfers*, afterwards the APR will be 14.49% - 24.49%* (Variable). The balance transfer fee is 5% of each balance transfer; $5 minimum. For example, transferring $10,000 to this card will incur a $500 fee. That’s $100 more than Santander’s offer and something to consider.
If it is going to take much longer, than this card can be a great option to dramatically reduce the cost of your debt and get out of debt faster. Just make sure you don’t spend on the card, you pay on time and you get the transfer done within the first 30 days.
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